Report 2010-125 Recommendation 1 Responses
Report 2010-125: State Lands Commission: Because It Has Not Managed Public Lands Effectively, the State Has Lost Millions in Revenue for the General Fund (Release Date: August 2011)
Recommendation #1 To: Lands Commission, State
When the commission determines that it will pursue delinquent lessees itself, it should use a collection agency or a program such as the Franchise Tax Board's Interagency Intercept Collections Program.
Annual Follow-Up Agency Response From November 2017
As stated in previous responses, staff has determined that the Commission would need special legislation to obtain individual lessee social security numbers in order to participate in the Franchise Tax Board (FTB) Interagency Intercept Collections Program. Staff has also determined that the liability risks, legal requirements and obligations to keep such private information safe from disclosure outweigh the potential benefits of obtaining such authority to request that kind of information. Failure to collect timely rents results in the Commission declaring lessee in trespass and seeking ejectment through the courts. The Commission has been reluctant to pursue this course of action due to the high costs associated with it. Recent analysis of cases successfully pursued by Commission staff and the Attorney General show those costs to be in excess of $300,000 per action yet involve annual rents of only a few thousand dollars. The Commission received authority to assess administrative penalties in trespass and lease compliance situations from the Legislature in Chapter 247, Statutes of 2012 (AB 2082) and on January 1, 2013, Public Resources Code sections 6224.3 and following became effective. These sections authorize the Commission to hold administrative hearings to determine whether a person has built or maintains an unauthorized structure on land under the Commission's jurisdiction. On September 7, 2016, the Office of Administrative Law endorsed the Commission's rulemaking that implements this authority. The regulations became effective January 1, 2017. The administrative hearings provide the Commission with a streamlined and cost-effective process for addressing unauthorized structures and delinquent lessees. For these reasons, this recommendation will not be implemented.
California State Auditor's Assessment of Annual Follow-Up Status: Will Not Implement
Annual Follow-Up Agency Response From October 2016
As stated in previous responses, staff has determined that the Commission would need special legislation to obtain individual lessee social security numbers in order to participate in the Franchise Tax Board (FTB) Interagency Intercept Collections Program. Staff has also determined that the liability risks, legal requirements and obligations to keep such private information safe from disclosure outweigh the potential benefits of obtaining such authority to request that kind of information. Failure to collect timely rents results in the Commission declaring lessee in trespass and seeking ejectment through the courts. The Commission has been reluctant to pursue this course of action due to the high costs associated with it. Recent analysis of cases successfully pursued by Commission staff and the Attorney General show those costs to be in excess of $300,000 per action yet involve annual rents of only a few thousand dollars. The Commission received authority to assess administrative penalties in trespass and lease compliance situations from the Legislature in Chapter 247, Statutes of 2012 (AB2082) and on January 1, 2013, Public Resources Code sections 6224.3 and following became effective. These sections authorize the Commission to hold administrative hearings to determine whether a person has built or maintains an unauthorized structure on land under the Commission's jurisdiction. On September 7, 2016, the Office of Administrative Law endorsed the Commission's rulemaking that implements this authority. The regulations become effective January 1, 2017. The administrative hearings will provide the Commission with a streamlined and cost effective process for addressing unauthorized structures and delinquent lessees. For these reasons, this recommendation will not be implemented.
California State Auditor's Assessment of Annual Follow-Up Status: Will Not Implement
Annual Follow-Up Agency Response From September 2015
Response: As stated in previous responses, staff has determined that the Commission would need special legislation to obtain individual lessee social security numbers in order to participate in the Franchise Tax Board (FTB) Interagency Intercept Collections Program. Staff has also determined that the liability risks, legal requirements and obligations to keep such private information safe from disclosure outweigh the potential benefits of obtaining such authority to request that kind of information.
Failure to collect timely rents results in the Commission declaring lessee in trespass and seeking ejectment through the courts. The Commission has been reluctant to pursue this course of action due to the high costs associated with it. Recent analysis of cases successfully pursued by Commission staff and the Attorney General show those costs to be in excess of $300,000 per action yet involve rents of only a few thousand dollars a year.
The Commission has received authority to assess administrative penalties in trespass and lease compliance situations from the Legislature in Chapter 247, Statutes of 2012 (AB2082). The Commission is currently promulgating regulations to give it the authority to levy penalties to those in trespass, including those in breach by failing to pay rents due the State. We expect the regulations to be considered by the Commission in early 2016 and in effect by Fall 2016. Once in place, this will provide Commission staff a more effective tool for dealing with delinquent lessees.
For these reasons and those stated previously, this recommendation will not be implemented.
California State Auditor's Assessment of Annual Follow-Up Status: Will Not Implement
Annual Follow-Up Agency Response From October 2014
As stated in previous responses, staff has determined that the Commission would need special legislation to obtain individual lessee social security numbers in order to participate in the Franchise Tax Board (FTB) Interagency Intercept Collections Program. Staff has also determined that the liability risks, legal requirements and obligations to keep such private information safe from disclosure outweigh the potential benefits of obtaining such authority to request that kind of information. For these reasons and those stated previously, this recommendation will not be implemented.
California State Auditor's Assessment of Annual Follow-Up Status: Will Not Implement
Annual Follow-Up Agency Response From October 2013
As stated in the October 2012 response, staff has determined that the Commission would need special legislation to obtain individual lessee social security numbers in order to participate in the Franchise Tax Board (FTB) Interagency Intercept Collections Program. Staff has also determined that the liability risks, legal requirements and obligations to keep such private information safe from disclosure outweigh the potential benefits of obtaining such authority to request that kind of information. For these reasons and those stated previously, this recommendation will not be implemented.
California State Auditor's Assessment of Annual Follow-Up Status: Will Not Implement
Annual Follow-Up Agency Response From October 2012
Staff has determined that the Commission would need special legislation to obtain individual lessee social security numbers in order to participate in the Franchise Tax Board Interagency (FTB) Intercept Collections Program. Staff has also determined that the liability risks, legal requirements and obligations to keep such private information safe from disclosure outweigh the potential benefits of obtaining such authority to request that kind of information. The FTB Intercept program is of limited usefulness as it can only be used in instances where the lessee is a person. These leases typically have rents of less than $1,000 a year which makes using the FTB Intercept Program marginally advantageous versus the cost of security. Higher rents are with companies using an Employer or Taxpayer Identification Number (EIN or TIN) and that is not incorporated in the program. Also, there has been an increasing trend by private lessees to enter into lease as a family or living trust, which is identified by the TIN rather than Social Security number. Additionally, staff has learned from the California Office of Privacy Protection that most state agencies are moving away from the use of social security numbers and trying to minimize their use because of the significant responsibilities to restrict access and comply with numerous state and federal privacy requirements. As to the feasibility of using collection agencies, the federal restrictions on the purposes for which a social security number (SSN) is required precludes the Commission from requiring a SSN to lease state land. Furthermore, the expenses involved in obtaining and maintaining this private information would provide little additional opportunity or benefit for the Commission to collect on unpaid rent using collection agencies.
California State Auditor's Assessment of Annual Follow-Up Status: Will Not Implement
All Recommendations in 2010-125
Agency responses received after June 2013 are posted verbatim.